Morning Update – April 3, 2020

Oh man, I almost missed USO yesterday. I just happened to go to break. So I sold in my 401k account at $5.42 or so, then tweeted, then got to webull and only got $5.16 or something when selling there, then switching over to and the price was at $4.9? geez, then shortly after that, the price went back above $5.2. Late yesterday I bought back into USO at $5.13 with 5% of funds. I think the hype of the OPEC ++++ + + + meeting is still going to drive oil prices closer to $30. Do believe the market will remain over-supplied even if countries agree to cut back on production/exports. Some countries will simply lie and export what they can anyway, especially when demand starts creeping back online. All-in-all I think a little USO is worth holding long term, and global oil markets have shown they are willing to make changes when prices get this low.

With all this said, the meeting will still be a mess. Countries are already being forced to cut back on exports because the oil will simply not be able to be offloaded to an importing country. So the countries meet and look proactive, but once demand picks up even a little bit, everyone will be scrambling to make a deal to get back market share.

On to Natgas. Pricing got to around $1.55 for prompt natgas yesterday. I’m not the best a pricing for oil or gas, but in my limited experience, $1.5 gas seems similar to $20 oil. Companies cannot survive on either of these prices for very long and many smaller companies are willing to make sacrifices quickly if it will help get a better price for the fuel they are trying to produce. There is word that production is falling, but also industrial demand is falling. Also industrial demand right now probably fall faster than production, but production has already crossed a barrier into an under-supplied market. So the balance is still very close, and prices are worth more than $1.5 if not for the “Wuh-Flu”.

As for my Natgas positions, I bought some more UNG in Stockhoot yesterday at $11.75 with 5% of funds. So right now I”m going to add to UNG with 5% of my funds at $11.69

Currently I am holding:

55% of funds in UNG with an average of $13.41

5% of funds in USO with an average of $5.13

I am going to sell USO right now. CLM20 is at $30, and that was essentially my target, and though I have not done so well with natgas lately, that is what I’m more comfortable with trading. Selling out of USO again at $5.75ish I’ll be holding my UNG position steady today; maybe if natgas prices fall below $1.5, I”ll buy 5% more UNG. Good Luck